Bank Statement Mortgage Loans
One of our most popular mortgage loan programs at Non-QM Mortgage Brokers is the bank statement loans for self-employed borrowers. As a self-employed individual, your income is not stable and can be unpredictable. So you might wonder, with this being the case, how can you finance a property investment? You can purchase any type of home with owner-occupant residency status, second home status, or as an investor with bank statement loans. Many second home buyers will buy waterfront condominiums with bank statement loans as a second home.
Especially given the complex mortgage approval process and requirements – one being a standard proof of income, which self-employed individuals don’t have. If you are in this situation, we want to tell you about a particular type of loan, known as a bank statement mortgage, which will surely answer all your concerns or, better yet, put you a step closer to homeownership. So, stick around to find out more!
What Are Bank Statement Loans?
This is a non-traditional loan with which one doesn’t need to provide definitive proof of income to get it. With traditional loans, verifying your income is crucial to the approval process. And because self-employed borrowers’ payments can’t be verified the same way a salaried individual would – with things like pay stubs, tax returns, or employment verification – there was a need to establish a different type of mortgage with a slightly different verification process. So, that’s where bank statement loans came about. All borrowers must produce bank records detailing their financial activities when taking up this mortgage over a specified period.
How Do Mortgage Lenders Process and Underwrite Bank Statement Loans
When you present your bank statements to the lender, they will try to establish your monthly or quarterly snapshot of the financial activity, including withdrawals and deposits. Doing this will give the lender a clear picture of the amount of money coming into your account, the amount you spend and save, and the amount remaining in your account. When we talk of deposits, we refer to direct deposits, cheques, and wire transfers. As for withdrawals, it includes direct withdrawals as well as online payments.
How Can I Qualify For Bank Statement Loans?
Getting bank statement loans as a self-employed borrower depends on which lender you approach. Bank statement loans are non-QM loans where the wholesale lender either holds the mortgage in-house or sells them to a private secondary market. But there are standard requirements you will need to meet before you qualify. They are as follows:
- Bank statements going back 12-24 months detailing all the financial activities will be taken as cash flow evidence.
- Once the lender thoroughly analyses your bank activities, they will determine your debt-to-income ratio, which will help determine the amount you qualify to borrow.
- Have at least a 660 FICO score
Down Payment Requirements On Bank Statement Loans
The down payment requirements on bank statement loans depend on the borrower’s credit scores and credit profile. Mortgage rates on bank statement loans depend on the borrower’s credit scores and down payment. Income tax returns are not required. However, the self-employed borrowers need documentation the business has been in business full-time for at least two years is required. Generally, a 20% down payment is required. In some instances, some lenders will allow a 10% down payment for higher credit score borrowers. Up to a 50% debt-to-income ratio (if you have debt, try paying as much as possible before applying for the loan).
Are All Non-QM Lenders of Bank Statement Loans The Same?
Not all mortgage lenders of bank statement loans are the same. Some mortgage lenders of bank statement loans may require 24 months of bank statements while other lenders may require 12 months of bank statement deposits. Regarding bank statement loans, self-employed borrowers must do their due diligence before settling on a loan provider. Borrowers should do their due diligence because the loan program’s interest rates and other crucial aspects depend on the approval requirements, which are unique to each lender. Having said that, though, here are a few general tips on how to find the right lender.
Check Out The Reviews of Non-QM Lenders of Bank Statement Loans
Check out the reviews of the lenders available to you. You can determine the most credible and trustworthy lender. From the reviews, have there been any complaints? And if yes, what did the lender do to address them? All this information will help you make a much more informed decision.
Feel them out – after checking their reviews, try to see what their customer service is like. Are they helpful? Do they seem to have their customer best interests at heart? This way, you will know what to expect when settling on the lender. Ask questions – before you make your application, you may want to know a couple of things, like figuring out the requirements, attached fees, and any costs apart from the interest rates. This will help you get the best loan terms.
How Difficult Is It To Qualify For Bank Statement Loans
When securing a loan, it gets easier as long as your bank statements can prove your deposits and you have a decent credit score. Since bank statement loans are based on your bank statements and not the traditional income requirements, many more borrowers who otherwise wouldn’t qualify for the traditional loans would get an opportunity to apply and most likely qualify. However, the hard bit is finding the best loan terms with a reliable lender.
Can I Refinance Using Bank Statement Loans?
Yes, you can refinance using bank statement loans! Homeowners can use bank statement mortgage loans to refinance loans including cash-out refinances if they have enough home equity to meet the lending requirements. Many borrowers can get a cash-out to refinance a loan of up to 80% of their property value.
Can I Qualify For Bank Statement Loans After Bankruptcy?
Yes, you can qualify for bank statement loans after bankruptcy! Declaring bankruptcy doesn’t mean that it would be the end of the world for you or that your dreams of owning a home will go up in smoke. Even though it might take time, you could still prove your creditworthiness to a lender with hard work.
As long as your recent bank statements reassure the lender that you are turning a new leaf in your life and that your debt-to-income ratio has massively improved, you shouldn’t have a hard time securing a loan. There are no waiting period requirements to qualify for bank statement loans after bankruptcy and/or foreclosure.
Benefits of Bank State Loans
As we conclude, we can agree bank statement loans are a great choice for self-employed individuals, including freelancers, independent contractors, and seasonal workers. Most self-employed business owners want to be had a difficult time qualifying for a home loan due to the income taxes they filed. Most self-employed homebuyers will have massive unreimbursed business expenses. Many self-employed business owners could not qualify for a mortgage even though could easily afford the monthly payment on a home.
To secure the loan, all you need to do is demonstrate to your lender that you have a track record of responsible financial practices through your bank statements and all other paperwork that will be required from you. So, if at all you will need to make an application sometime in the future, start keeping track of everything today!